MNCs in the News-2018-07-06

China

American companies in China suggest Beijing already is pressuring them with “‘qualitative’” measures to retaliate against the United States’ (US) plan to implement USD $34 billion of tariffs on Chinese products. These include excessively long quarantines, delays of worker visas, and slower processing of licensing applications and could include burdensome plant safety inspections. US industry association officials report “executives across industries have raised concerns about an increasingly hostile regulatory environment.” They also fret about potential citizen boycotts in China (Danielle Paquette, “U.S. Companies in China Think the Government is Already Messing with Them,” The Washington Post, July 4, 2018, https://www.washingtonpost.com/world/asia_pacific/us-companies-in-china-...)

US President Donald Trump “American First” agenda, which stresses expanding manufacturing in the US, coupled with a warm investment environment entailed billions of dollars in economic incentives from the State of Wisconsin and local governments, lured Foxconn, the world’s largest contract electronics manufacturer, to commit to a huge display-screen manufacturing plant in Wisconsin. The facility—which will be one of the largest in North America, should be completed in 2024, and may entail up to $10 billion in investment—broke ground at the end of June (“Foxconn Breaks Ground on New Plant in U.S. Wisconsin,” Xinhua, June 29, 2018, http://www.xinhuanet.com/english/2018-06/29/c_137288160.htm)

The US Department of Commerce allowed China’s ZTE to “re-start some business activities as it considers lifting a seven-year ban imposed on the firm.” Specifically, ZTE would be allowed, for several months, to “support its existing handsets in the US and continue operation of existing networks.” The ban, which would have blocked ZTE’s from acquiring parts from US suppliers, was imposed because ZTE “had violated trade bans with Iran and North Korea.” ZTE also will pay a USD $1 billion penalty and change its management (“Trump Administration Tells ZTE It Can Restart Some Operations,” BBC News, July 4, 2018, https://www.bbc.com/news/business-44706872)

Pakistan has requested that China keep giving it money so it does not have to request an International Monetary Fund (IMF) bailout. Pakistan is considering the latter because its foreign reserves are falling due to rising import costs and falling remittances. Pakistani officials have told their Chinese counterparts that if they go to the IMF they will have to disclose project financing details and may have to cancel some projects which in turn could endanger the China-Pakistan Economic Corridor (CPEC) (Farhan Bokhari and Kiran Stacey, “Pakistan Seeks More Loans From China to Avert Currency Crisis,” Financial Times, July 6, 2018)

Japan

Due to Trump’s push to expand US domestic employment, the value of new Japanese foreign direct investment (FDI) increased by 70 percent last year. Also relevant were a brisk US economy and significant tax cuts. In addition, US municipal and state officials have been actively courting Japanese businesses as part of Trump’s mission to cut the trade deficit by luring FDI. Nonetheless, Japanese companies still harbor concerns such as stricter visa procedures, a shortage of human resources, and confusing rules of origin for auto components (“Fresh Japanese direct investment in US soars 70%,” Nikkei Asian Review, July 4, 2018, https://asia.nikkei.com/Economy/Fresh-Japanese-direct-investment-in-US-s...)

Japan and Kazakhstan will implement seven joint projects worth approximately USD $2 billion in areas like nuclear energy, transport, and water supply. Both countries share mutual interests and prospects for cooperation in areas such as petrochemicals, infrastructure, pharmaceuticals, energy, information technologies, and innovation. The KazCentre for Housing and Utilities and two Japanese companies signed agreements on pilot projects in heat and water supply systems, while Kazak and Japanese nuclear power companies signed a memorandum on nuclear energy (“Japan to invest in Kazakhstan’s urban transport, nuclear energy, water supply,” The Astana Times, July 2, 2018, https://astanatimes.com/2018/07/japan-to-invest-in-kazakhstans-urban-tra...)

South Korea

South Korea’s Ministry of Trade, Industry and Energy is working with the US and the United Arab Emirates to source partner companies for a $19 billion power project in Saudi Arabia. Seoul selected Korea Electric Power and Korea Hydro & Nuclear power for the project. The King Abdullah City for Atomic and Renewable Energy is looking to build two nuclear power plants with a capacity of 2.8 GW by 2030 (Jung Min-hee, “S. Korea to Work with US, UAE for Nuclear Power Plant Project in Saudi Arabia,” Business Korea, July 4, 2018, http://www.businesskorea.co.kr/news/articleView.html?idxno=23433)

South Korean electronics maker Samsung urged Chinese officials to cancel discriminatory policies against foreign businesses. Samsung cited Beijing’s “Made in China 2025” plan that pushes foreign firms to give up trade secrets and grant Chinese partners access to intellectual property in return for operating in the Chinese market. The Korean firm also requested Beijing conduct a fair memory chip antitrust investigations into Samsung as some analysts claim China is using the investigation as a means to obtain technology transfers from South Korea’s biggest chipmaker (Kim Yoo-Chul, “Samsung urges China to stop ‘discriminatory treatment’,” The Korea Times, July 2, 2018, http://www.koreatimes.co.kr/www/tech/2018/07/133_251596.html)

Malaysia

Malaysia and China are in discussions about Malaysian Prime Minister Mahathir Mohamad potentially visiting Beijing soon, after Kuala Lumpur suspended the China-backed $20 billion East Coast Railway Link and two pipeline projects worth $2.3 billion. While the Malaysian Finance Ministry stated that the decisions are not directed at any particular country, Mahathir said during his recent visit to Tokyo that “We will be friendly with China, but we do not want to be indebted to China.” (Philip Wen & Rozanna Latiff, “Malaysia’s Mahathir to visit China after putting $20 billion of projects on ice: sources,” Reuters, July 5, 2018, https://www.reuters.com/article/us-malaysia-politics-china/malaysias-mah...)

Per a senior Malaysian official, Malaysia is open to more value-added FDI from China. The Malaysian deputy ministry of international trade and industry was quoted citing positive dialogues between the founder of Chinese e-commerce platform Alibaba and Prime Minister Mahathir as evidence of Malaysia’s positive stance towards Chinese investments. Alibaba’s new office in Malaysia marks a new phase of its strategic partnership with Malaysia and the development of its first Electronic World Trade Platform facility, the Digital Free Trade Zone, outside of China (“Malaysia welcomes more value-added Chinese investment: official,” XinhuaNet, July 3, 2018, http://www.xinhuanet.com/english/2018-07/03/c_137299130.htm)

*The information compiled in the MNCs in the News digest is gathered from sources believed to be reliable, but the Wong MNC Center does not guarantee their accuracy. The content of the MNCs in the News digest does not necessarily represent the view of the Wong MNC Center, its Board of Directors, or its Advisory Board, but is intended for the non-commercial use of readers in order to foster debate and discussion and to facilitate and stimulate research.